Ostensibly, it would seem like there are dozens of potential strategies that can be employed at a volleyball club. In reality, though, at a fundamental level, there are really only three strategies that all clubs practice. They are a low cost strategy, a differentiation strategy or a combination of the two which we will call a hybrid strategy. Within each of these strategies, dozens of tactics are employed.

An example of a low cost strategy might be a manufacturing company that makes its products in Mexico to take advantage of very low wage and facility costs.

A classic differentiation strategy would be a drug company that has a patent on a particular drug it owns. Since it is the only company that can make the drug, by law, it would hold a monopoly so it’s drug would be “differentiated “from all other drugs on the market.

In the volleyball world, we observe clubs that employ both low cost or differentiation strategies or combinations of the two.

LOW COST STRATEGY
First, let’s consider a low cost strategy. It could be either a for profit club or a 501(C3) non- profit organization. A non-profit club would possess the inherent advantage of not having to charge a fee high enough to generate a profit.

A low cost club might strive to attract a high number of players by charging a low participation fee. This is a classic elasticity of demand application illustrated in the following chart.

CLUB FEEPARTICIPANTSTOTAL REVENUE
$2,500200$500,000
$2,000250$500,000
$1,500350$525,000
$1,000600$600,000
$800700$560,000

The above hypothetical chart suggests that, in this particular market, the number of participants increases from 200 to 600 by lowering the participation fee from $2,500.00 to $1,000.00. The revenue curve tops out at the $1,000.00 participation fee level where total revenue peaks at $600,000.00.

A club that pursues this low cost strategy might also be expected to employ some combination of the following business practices:

  • Practice in school gyms, sometimes for free, or, at a very low rental charge
  • Pay less for coaches, sometimes even using parents for free
  • Hold fewer practices per week
  • Offer a Spartan apparel package
  • Travel to, mostly, local tournaments
  • Aggressively seek corporate sponsorships selling the fact that they have more players
  • Employ fundraisers
  • Minimal recruiting help
  • Shorter season, both, to keep costs down and attract spring sport athletes
  • Organize as a 501(C3) non-profit corporation
  • Work out of home, saving office rental costs

DIFFERENTATION STRATEGY
Another set of eyes might look at the previous chart and, instead, decide to employ a high level differentiation strategy opting to charge $2,500.00 to train 200 athletes at a higher level.

They might reason that, while they might generate less revenue overall, they would also have to pay fewer coaches and be charged for less rental time. Moreover, the higher level players they would pursue might demand more services for which the club could charge more. The presumption is that a higher end club would pay more for accomplished coaches and, in so doing, attract a more skilled pool of players who could be leveraged in the following ways:

  • Robust recruiting service for which a fee is charged
  • Camps
  • Private lessons
  • Hosting tournaments because other clubs want to play against your higher level teams
  • Obtain a national apparel sponsorship package and, even, consider starting a wholesale apparel division selling to schools and smaller clubs as well as through your pro shop.

HYBRID STRATEGY
We have now considered two clubs pursuing the two classic generic strategies: low cost and differentiation. But what if a club decided to employ a hybrid strategy by incorporating both strategies in the same club?

A club might dissect their market and decide that there are really two markets that need to be served: a low cost, no frills market as well as a high end, service intensive one.

If one club could offer programs to serve both markets, simultaneously, then the potential would exist to gain an economy of scale by attracting both the casual and serious volleyball player to it’s club.

An example of this hybrid strategy would be a club that offers both a lower cost regional program for the casual and, sometimes, lower income market and a high end national / elite program for the serious volleyball players. By merging the low cost strategy with the differentiation approach, your potential pool of players would grow substantially.

From an administrative standpoint, this combined approach would make sense because so many of the services needed for both strategies are one in the same: billing, collections, marketing, purchasing, scheduling, coaching, accounting and legal.

There are other advantages to combining these two strategies. For example, every club in America has a challenge attracting enough quality coaches, especially for your lower level, regional teams.

With an elite division, a club can leverage it’s elite level coaches by adopting a Master Coach Program. Basically, you would pay an elite level coach to simultaneously oversee several regional practices being conducted at the same time in the same gymnasium. Each regional team has a beginner level coach who would take his or her practice instructions from a master level coach calling out instructions and leading drills which all regional teams heed.

In this way, all teams learn the club’s preferred training philosophy while the young coaches learn how to efficiently run drills and train in unison.

A large number of players in your club creates scale and reduces your cost per player. The term “barrier to entry” is an essential competitive concept and you would want your club to have as many “barriers to entry”as you can earn. Think of a barrier to entry as a big wall around your club that prevents other clubs from competing, effectively, against you. Some barriers to entry in the volleyball business might be:

  • Cost advantage gained by having more players in your club.
  • A building can be a large barrier to entry notably because it would be expensive for others to duplicate but, also, because is permits you to control practice times, host tournaments, sell concessions, have your own pro shop and run camps and clinics.
  • A training culture. A club that commits to training its athletes at a consistently high level will attract more and better players.
  • Reputation. Over the years, clubs can establish stellar reputations that players want to be a part of.
  • Location. Everything equal, a club ten minutes from home would have an advantage over one thirty minutes away.
  • Scholarship Opportunities. Success begets success and good players want to play with other good players. This leads to more scholarship opportunities.

There is one important competitive concept that should be thoroughly understood by volleyball club owners. It is the idea of “first mover advantage”. If you can gain some significant “first movers advantages” as a club you will be well on your way to having a successful enterprise.

If you can be the first volleyball club in your market you can gain a great competitive advantage over a latecomer competitor(s). Of course, you must do a good job – being first just affords you a golden opportunity. If you can establish yourself as the best club in your market, you are, in effect, building a wall around your business that competitors must scale if they are to take your market share.

Besides establishing a first mover advantage for your club you can also be the first in your region to host a tournament at a convention center or establish a summer camp presence, for example.

Sometimes it is possible to establish market dominance without being the first club in the market. If you can find a market where the existing club(s) is not doing a good job, you can enter the market later with a better product and gain the larger market share. You could do this in any number of ways: better coaches and training and/or a lower price (better value) are two that come to mind.

So there you have it. The volleyball club business would make for a fascinating board game. Your overriding goal would be to provide the best volleyball training possible given your resource constraints. How you move the chess pieces around the board will, ultimately, determine how successful you are at accomplishing this task while maintaining a viable club and business.

For related reading on running your club, click here.

About the Author

The author, Tim Kuzma, is an entrepreneur and registered Certified Financial Planner. He is a graduate of The University of Michigan, where he played basketball.